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OVERVIEW

Health plan providers of all sizes in the United States face pressure for lower pricing, better customer service and innovative product lines. However, national plan providers consistently outperform regionals. The nation’s top eight health plan providers own 50 percent of the market.

But amid these challenges, there are several opportunities for smaller regional plan providers to turn disadvantages into market-differentiating advantages. By duplicating value-add capabilities from nationals, "born digital" and other high-performing regional plans, smaller regional plan providers can improve their competitive agility.

KEY FINDINGS

Making a greater local impact with targeted investments
National health plan providers have invested in new digital capabilities, launched new revenue ventures and made acquisitions to achieve operational scale. Regionals can focus their attention and stretch investment dollars by placing small, more strategic bets.

Activating value-based care by operating as care coordination platforms
National plan providers have been quicker to transition to value-based arrangements. Regionals tend to be the largest payers in their home markets. This advantage can be used to build partnerships with local providers to become the preferred enablers of value-based care in the communities they serve.

Operating differently helps regionals work more efficiently
Nationals have achieved economies of scale, and their administrative costs are at or more than 20 percent lower than those of regional plans. Smaller plan providers can pivot toward innovations by partnering quickly to adopt new capabilities.

RECOMMENDATIONS

Maximizing connections with local customers, partners and providers
Smaller plans know local communities, organizations and providers on a deeper level than nationals, understanding the capabilities needed most—and where they can fill the gaps.

Redesigning the operating model to create shared outcomes with providers
Regional plan providers are agile, and can easily pivot from a traditional model to more relationship-based ones with local providers.

Gaining virtual scale and cost reduction
National health plan providers have economies of scale, but smaller plans can scale smarter using digital technology and strategic partners.

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